Monday, August 25, 2014

Deal me out! Casino wars in Baltimore trigger allegations of client list theft.

Maryland law has always protected employers when high ranking employees leave with important client lists. And in the high stakes industry of casino gambling, the departing employee can expect only the most immediate and ruthless reaction to the perceived theft of client lists.

On August 22, 2014, Maryland Live! sued a former VIP Casino Host that jumped ship to take a job with the Horseshoe Casino, scheduled to open in just a few days. At issue is the alleged mis-use of a "high rollers" list of Maryland Live! clients.

According to the public filing in the United States District Court for the District of Maryland, Helena Wong carried a list of 1,000 high roller participants in Maryland Live's Chairman Club and Black Card programs. The lawsuit alleges secret and masked e-mails soliciting these clients to bring their gambling to the Horseshoe Casino.

Ms. Wong's alleged e-mails, quoted in the court papers, begs her former clients to keep her secret, imploring them
...PLEASE DO NOT repeat or show this email to any of MD Live's Personnel. This is a confidential email between us.
 Ms. Wong is alleged to have signed an agreement that promises to keep this type of customer list private and confidential, as it is the property of her former employer, Maryland Live!.

On the same day the complaint was filed, the federal court issued a temporary restraining order barring Ms. Wong from contacting or using the list.  This order comes just four days before the Horseshoe Casino opens. She will have a chance in 21 days to contest the TRO when the Horseshoe Casino will next argue to extend the TRO for the duration of the case.

Ms. Wong is in for a long and painful court experience. If it is proven that she deliberately broke an agreement to leave customer lists behind, she could incur a costly civil judgment.

But this isn't necessarily about Ms. Wong.  It is about the steep competition among the 15 casinos located within 250 miles of Maryland Live! Casino's 4,200 slot machines, 189 table games, seven restaurants, concert venue and shopping.  And it doesn't just happen to casino employees. In every competitive industry, companies sue to stop the free movement of key employees from one corporate office to another.  Cases in this law office have involved the exact same legal issues, while involving employees of less glamorous or less publicized industries, such as manufacturing companies, professional practices, and even the route salesman who delivers peanuts to your quick-mart.

Really, peanut company A sued to prevent a former driver from working for peanut company B delivering little bags of nuts to a list of quick-marts. Even where the profit margins are thing, companies will flail their former employees to maintain a competitive advantage in the marketplace.

All these cases have one common theme-- Maryland law is heavily in favor of protecting the former employer's trade secrets and customer lists.  There are certainly valid defenses to these claims.  For example, if the names on the gambling client list are equally accessible from some non-privileged source (imagine an industry listing of known high-rollers), then this particular list may not warrant court protection.

But even a defensible claim must be actually defended.  And that is where the former employee is at great risk.  Right at the moment where the court wields its greatest authority to stop you from working, or compels return of information vital to your livelihood, you must expend money you might no longer be empowered to earn and hire a lawyer.

It is economic warfare, and the employee is not necessarily the primary target.  Ms. Wong may only be cannon fodder for the larger battle between two Goliaths of the industry.

Think you will make a move to take a new job with a competitor?  Did you sign a confidentiality or non-competition agreement?  Then consider your options very carefully before over-selling your value to that new employer or folks might write a blog post about your case.

UPDATE 9-2-2014:  The evidence at the preliminary injunction hearing (the second hearing, to see if the TRO would stay in place) demonstrated that Ms. Wong contacted only 19 gamblers from her former employer.  It appears she memorized them, and did not actually steal a list.  But nonetheless, she and her new employer may not contact these 19 gamblers until the case is resolved.

And wouldn't you know, it was one of the gamblers that ratted Ms. Wong out to her former employer, calling the contact "unprofessional."  But yet, he also testified to attending the opening of the new Horseshoe Casino, saying "I'm not an idiot..." Just hilarious.